Shopify Cuts 10% of Employees Amid Downsizing, Stock Drops
Ottawa-based Shopify CEO Tobias “Tobi” Lütke announced in a company email on Tuesday that the eCommerce platform is laying off close to 10% of its staff as it weathers these “challenging macro economic times.”
The next part of the journey will involve fewer teammates than we have picked up along the way. Shopify has to go through a reduction in workforce that will see about 10% leave by the end of the day.
Most of the jobs being cut at the company are roles in recruiting, support, and sales, along with some positions that Lütke described as “over-specialized and duplicate.”
Shopify is also eliminating some teams that were nice-to-haves before but aren’t directly involved in its core business of building products.
Emails went out to those affected by the job cuts on the same day.
Lütke went on to explain that this is a result of Shopify growing too fast during the COVID-19 pandemic. Online retail surged abnormally during the pandemic, and Shopify also needed to develop new products to help merchants adapt to the new normal.
Lütke bet that the eCommerce space would maintain its higher market share post-pandemic, and grew Shopify accordingly. “That bet didn’t pay off,” he said in his email.
Online retail is now facing a correction, and Shopify must follow suit to survive. The global recession the world is currently heading into likely has something to do with the layoffs as well.
Shopify is offering “generous” severance packages to help those who lose their jobs with the transition.
“Those affected today will get 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify. We’ll remove any equity cliff, and extend any medical benefits,” the CEO wrote.
In addition, Shopify will also offer outplacement services, including career coaching, interviewing support, resume crafting, and more, to help on their former employees’ career journeys. They will also be provided with a kickstart allowance which they can spend on new equipment like laptops.
“Our opportunity is massive and it’s still early days for Shopify. Every team here is now either focused on building products or directly supporting those who do,” Lütke concluded.
Earlier this month, tech giant Google also announced a near-hiring freeze because of the “uncertain” economy.